Business groups challenging the Securities and Exchange Commission's 2022 rule-making on proxy-voting advice will appeal a federal judge's court order in favor of the SEC.
The U.S. Chamber of Commerce, Business Roundtable and Tennessee Chamber of Commerce & Industry on Wednesday filed a notice of appeal in U.S. District Court in Nashville, Tenn., after Judge Aleta A. Trauger on April 24 ruled that the SEC was within its authority to reconsider its rules on proxy-voting advice last year and dismissed the business groups' lawsuit.
The lawsuit, initially filed in July, takes issue with the SEC's decision that same month to rescind two amendments to its rules concerning proxy-voting advice adopted in 2020 under the previous administration that increased restrictions on proxy advisory firms.
The rescinded amendments would have allowed companies that were the subject of voting advice to access that advice prior to or at the same time as it was disseminated to clients. It also would have required proxy advisory firms to provide clients with access to any response the company provides on voting advice before those clients vote.
The business groups contended that the SEC did not follow proper procedures or provide adequate justification for its decision to roll back the 2020 rule before it was allowed to take effect.
However, in her April 24 decision, Ms. Trauger said the SEC "reconsidered a matter and came down on a different side of a debatable question, which it was permitted to do, and then it explained that decision clearly and thoroughly, as was required."
In their filing Wednesday, the business groups appealed their case to the Sixth U.S. Circuit Court of Appeals.
"The SEC's 2020 proxy advisory reforms would have helped improve the accuracy of information informing proxy vote recommendations," Business Roundtable CEO Joshua Bolten said in a statement Thursday. "The agency's rushed decision to prevent these modest, commonsense reforms from taking effect will make it more difficult for investors to differentiate fact from fiction when considering critical proposals."
Mr. Bolten added that his group "looks forward to pursuing the next phase of our legal action to preserve these vital shareholder protections, and we will continue to aggressively resist the SEC's regulatory overreach."